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Paradise lost? The case of technology-based small firms in New Zealand in the post-global financial crisis economic environment

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  • David Deakins
  • David North
  • Jo Bensemann

Abstract

In this paper, we draw on two studies that used face-to-face, qualitative interviews with technology-based small firms (TBSFs) and informal interviews with key informants. The interviews took place with two data-sets of TBSFs, the first with 20 firms in 2011 and the second with 34 agri-businesses in 2013. This study provides some temporal comparisons of the funding environment for TBSFs in New Zealand, but this is not a longitudinal study as the two data-sets were obtained from the recruitment of different firms. However, all the TBSFs were located in New Zealand, a small open economy with a limited domestic market, a population of 4.4 million, GDP per capita of US$32,260 (2010) and arguably an immature and limited financial infrastructure. This environment is complex for founding new businesses by technology-based entrepreneurs as developing and staying in New Zealand means accepting being a long distance from major overseas markets even though TBSFs have potential to be in global markets, in practice. Such TBSFs, therefore, face pressure to move overseas for markets and for finance and other resources; if successful they may make attractive takeover targets for overseas investors and MNCs. Despite these challenges, TBSFs have been promoted as key contributors to GDP and a way of filling the New Zealand productivity gap (compared with Australia and other developed nations). Although we find evidence of the development of embryonic regional and specialised business angel networks on the supply-side of finance, there is still a marked reluctance to undertake a search for external equity and evidence of discouraged borrowing and discouraged grant-based applications on the demand-side. New Zealand is sometimes described as 'paradise' (The use of this term often refers to a fondness for the high quality of life in New Zealand and its economic environment, not just the natural beauty of the country). due to its natural and outstanding beauty, but in our conclusions we suggest that the comparatively stable economic environment has not operated in favour of TBSFs.

Suggested Citation

  • David Deakins & David North & Jo Bensemann, 2015. "Paradise lost? The case of technology-based small firms in New Zealand in the post-global financial crisis economic environment," Venture Capital, Taylor & Francis Journals, vol. 17(1-2), pages 129-150, April.
    • Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:129-150
    DOI: 10.1080/13691066.2015.1021031
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    References listed on IDEAS

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    1. Hong Shangqin & Philip McCann & Les Oxley, 2013. "Innovation in New Zealand: issues of firm size, local market size and economic geography," Chapters, in: Frank Giarratani & Geoffrey J.D. Hewings & Philip McCann (ed.), Handbook of Industry Studies and Economic Geography, chapter 19, pages 459-478, Edward Elgar Publishing.
    2. Dina Cunha & Sandra T. Silva & Aurora A.C. Teixeira, 2013. "Are Academic Spin-Offs necessarily New Technology-Based firms?," FEP Working Papers 482, Universidade do Porto, Faculdade de Economia do Porto.
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    Cited by:

    1. Eggers, Fabian, 2020. "Masters of disasters? Challenges and opportunities for SMEs in times of crisis," Journal of Business Research, Elsevier, vol. 116(C), pages 199-208.

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